Memorandum

City of Lawrence

Finance Department

 

TO: 

Dave Corliss, City Manager

Cynthia Boecker, Assistant City Manager

 

FROM:

Ed Mullins, Finance Director

 

Date:

August 4, 2008

 

RE:

2008 General Obligation Bonds and Notes Resolutions

 

 

Background

The City of Lawrence currently has a note in the amount of $10,225,000 outstanding.  The note matures on October 1, 2008.  In order to retire the note, the City will need to issue a general obligation bond and a new note.  The current planned sizes of the bond and note are $3,740,000 and $11,940,000, respectively.

 

Description

In order to issue the general obligation bond and notes, the City Commission must approve a sale resolution.  Most of the required project resolutions have previously been approved.  However, resolutions authorizing the economic development project, the tennis center relocation, and the 19th and Louisiana project still require approval by the City Commission.  Funding for the Burrough’s Creek right of way will require passing a resolution setting a new maximum for public improvements under Charter Ordinance 27.  The issuance for the economic development project will be taxable.

 

A complete listing of the projects and amount of financing included in the proposed bond and note sale are shown in the attached spreadsheet.  Because of the October 1, 2008 note maturity, the 2008 bond and note sale is scheduled for September 9, 2008 with the closing of the sale scheduled for September 25, 2008.

 

In addition, there are two issues that appear to be good candidates for refunding.  The Series 2000-D and 2000-F can be refunded to generate a net present value benefit of an estimated $444,000 (see attached spreadsheet).  The estimated benefit ratio of over 5.3% exceeds our target rate of 3.0%.

 

Future Debt

On September 1, 2008, the city will retire $9,755,000 in general obligation bonds.  With the planned issuance of $3,740,000, the amount of outstanding general obligation bonds will be reduced by $6,015,000.  The table below compares the updated measures against the indicators from the City’s debt issuance guidelines.  After the 2008 debt issuance, the City will be below the maximums for all of the indicators stated in the guidelines. 

 

Measure

Guideline

Calculated

GO Bonds as a % of Appraised Value

2.20%

1.37%

Outstanding GO Bonds and Notes as a % of Statutory Debt Limit

60.00%

33.31%

Debt Service Payments from Bond and Interest as a % of Governmental Expenditures

15.00%

11.55%

GO Bonds Outstanding per Population

$1,100

$894.24

Overlapping GO Bonds Outstanding per Population

$2,500

$2,127.98

Mill Levy for Bond and Interest Fund

10.00

7.01

 

Recommendation

It is recommended that the City Commission approve the required resolutions to authorize the capital projects listed above and the sale resolution authorizing issuance of the Series 2008-A general obligation bond and Series 2008-I temporary note.  In addition, it is recommended that the City Commission approve the refunding of the Series 2000-D and 2000-F issues.